A social enterprise is a business where the profits are used for good rather than divided with the shareholders.
Myth 1 – A Social Enterprise lives on grants
By its own definition, Social Enterprise UK (the national voice for social enterprise) defines a Social Enterprise as one that gains at least 50% of their revenue from trading. Its essence is closer to a business than a charity.
Myth 2 – It is run by volunteers
Again a charity is more often reliant on volunteers but a Social Enterprise is business like any other, that simply reinvests (at least 50%) of its profits to further its social impact. Like any organisation, it can hire volunteers too.
Myth 3 – It has to be a Community Interest Company (CIC)
The CIC legal structure is designed to ensure profits are re-invested but any business can make a profit and then give it to a cause. A sole trader or limited company can just as easily invest 50% of its profits for the good of the community. Where it helps to be a CIC is quite often when applying for grants as funders most often would expect the assurance of an appropriate legal structure before giving out the cash. Funding to undertake specific work that either helps the community or to preserve the environment most often works in the same way.
Myth 4 – The owner works for free
Just like any other enterprise, staff will be paid from the revenues received and salaries are part of the expenditure. Because, generally, most people need a salary to pay their bills. Being a social enterprise is a strategy rather than a structure.